|This Trade Was Closed June 26, 2012|
Gold is starting to freak me out a little. I am closing this trade at $2.00 per share which is a nice 74% gain.
Overall I am starting to think that the Germans are going to give in and increase direct bond buying. That should send Gold (and gold stocks) up a lot.
Original Trade Post:
The consensus seems to be that the Fed will extend twist today. However, I can’t imagine that the run up has been based on twist expectations only. And in either case, I disagree. I think the Fed will make some vague promises to be ready to do “something” if things get “worse” and to keep interest rates low as long as “needed.”
The bottom line is that QE is not working and driving interest rates to 0% is about as low as you can go.
If the Fed underwhelms the market (safe bet) and – gasp – doesn’t ease at all I think the gold market will be in total chaos. In the past, FOMC days have been pretty good but adjustments can be very large. Think about March or last Monday.
I think ABX will fall to $35 where long term support is. A decline like that would put my trade about $2.00 in the money and if it happens quickly (this week) I think there is a good shot at getting 2.50-2.80 out of this trade.
- The Ticker: ABX
- Target Price: 2.60 per share
- The Trade
- Buy to Open Aug 2013 37 Puts at 1.15 or better
- Trade Opened: June 20, 2012
- Trade Closed: June 26, 2012
Chart courtesy Finviz. Click to open larger.
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